By default, yes...
There are some registry hacks to move the C:\Users to somewhere else, but I was never brave enough to try any of them.
I've been running with a small OS partition on one drive and the rest on other drives for a while, but I just let programs put the config data into drive C: since attempting to move them may cause problems depending on how much hard-coding the developers did in their programs.
You can move most of the folders using the following method:
Windows 7 - Moving My Documents
However, the largest chunk of program configurations is actually stored in C:\Users\<youruser>\AppData, which cannot be moved without registry hacks.